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State Abbreviation: NJ
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Financial markets are still reeling from political headlines that first began circulating on Tuesday afternoon. While stock markets made a reasonable attempt to retrace yesterday's big move lower, bond markets weren't as interested. Fortunately, that means mortgage ratesmoved modestly higher, leaving them fairly close to yesterday's 7-month lows.

On Tuesday morning, well-priced lenders were quoting conventional 30yr fixed rates of 4.0-4.125% on top tier scenarios. Over the past 2 days, the same scenarios were in the 3.875-4.0% range. An eighth of a percentage point is a big move for mortgage rates--especially in 2017 when the range hasn't been very much wider than a quarter point. It's the sort of improvement that provides strong incentive for risk-averse borrowers to lock.

Then there's today--a day where the improvement generally held its ground. That's the sort of development that provides strong incentive for risk-tolerant borrowers to continue floating. Just be aware that the rate market remains highly susceptible to political headlines. If you're floating, have a plan in place with your originator regarding the conditions that would justify locking.

Loan Originator Perspective

Yup, still floating. Overnight and market open were positive, late morning weakness has subsided. The new shorter term float threshold is 2.25, a violation of that would prompt lock recommendations because at this point anyone who floated is in a winning position and at some point you need to book your gains. -Jason Anker - Sr. Loan Officer

Like yesterday, most clients are eagerly wanting to lock in and take advantage of the recent gains resulting from all the DC drama. Nothing wrong with locking in these gains. I also do not see a huge risk to floating as there doesn’t seem to be much on the horizon that can change the current trend. Since gains are from the DC drama, the next chapter appears to be Wednesday when Comey is supposed to testify to Congress. Til then, you might be safe floating but not sure how much more we can gain. -Victor Burek, Churchill Mortgage

Bond markets surrendered a portion of this week's gains today, but rates still remained near 2017 lows. It's hardly surprising that some profit taking (selling) occurred after a significant rally, I'm glad it wasn't more pronounced. When will the next DC Drama spook markets? Your guess is as good as mine. Borrowers within 30 days of closing should probably lock in these gains, unless they have a penchant for risk. -Ted Rood, Senior Originator

Today's Best-Execution Rates

30YR FIXED - 4.00%

FHA/VA - 3.75%

15 YEAR FIXED - 3.25%

5 YEAR ARMS - 2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

Investors were relatively convinced that the decades-long trend toward lower rates had been permanently reversed after Trump became president, but such a conclusion would require YEARS to truly confirm

Instead of continuing higher in 2017, rates instead formed a narrow, sideways range, and held inside until April. Investor perceptions are shifting such that fiscal reforms and other policy developments will need to live up to expectations in order to push rates higher. Geopolitical risks would also need to avoid flaring up (more than they already have)

For the first time since the election, we're in a rate environment where you wouldn't be crazy not to lock at every little opportunity/improvement. Until/unless it's broken, the highest rates of early-2017 mark the ceiling, and we're now waiting to see how much lower we can go from here.

Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.

About the Author

A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators.
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